Payments in Bitcoin: Is Accepting and Paying with Bitcoins Worth It for Providers and Customers Alike?

Bitcoin Payments: The Pros for Clients and App Developers of Accepting BTC

By: Evgeniya Vi.

25 JAN 2018882

Bitcoin is confidently conquering the world. The list of large companies that now accepts payment in bitcoins is growing. This list includes Dell, Microsoft, and PayPal, among others. Small businesses are also beginning to look at digital currency, and some entrepreneurs have started actively using cryptocurrency. For instance, some web and app development companies now accept bitcoins as payment for their services.

Bitcoin is already an acceptable payment at mobile app development companies, retail stores, airlines, law firms, catering companies, and more. The list of companies that accept bitcoins is growing. The list of countries that now recognize bitcoin as a currency and create legislative conditions for its legal exchange is growing as well.

In order to visualize and gain an understanding of the different aspects of Bitcoins as compared to traditional currencies and to decide if it is advantageous to use Bitcoin as a payment tool, we will compare it with the U.S. dollar:

Bitcoin

Bitcoins are a decentralized e-currency that uses a peer-to-peer (P2P) network and operates without an administrative center. That is, there is no controlling center, and the issuing of bitcoins and processing of transactions are performed collectively.

Despite the fact that companies such as BitBills or Casascius represent physical variants of bitcoins, this currency is mostly digital.

The maximum limit for the release of bitcoins is 21 million.

Bitcoins are quite complex as a currency. To understand how this currency works and how to conduct transactions using it, a person must have a certain level of knowledge.

It is not recognized as a currency in most countries.

The account where the bitcoins are stored is not insured. Thus, the bitcoin owner can lose everything and will have no recourse if their electronic wallet is hacked, a hard disk breaks, or the bitcoin exchange where the currency was stored goes bankrupt.

U.S. Dollar

Only the Federal Reserve has the right to issue dollars, and the central bank issues emissions.

Dollars are originally created in physical form, and only then can an electronicanalogue of the currency appear.

The U.S. dollar can be emitted indefinitely.

One does not need special knowledge in order to use dollars.

It is an international currency.

Currency funds that are kept in banks are insured against certain financial risks, up to $250,000.

The Attractiveness of Bitcoin Payments for Small and Medium-Sized Businesses

Bitcoin payments have many advantages over traditional banks. This system allows users to make payments around the world without worrying about exchange rates. Confirmation of the transaction usually occurs within 10 minutes, and the transaction cannot be canceled.

Since the launch of this cryptocurrency, several changes have been made to the system that are aimed at improving the security of bitcoin storage. A high level of network security and bitcoin can be achieved through the use of huge computing power.

Advantages of Bitcoin for Customers, Startups, and IT Entrepreneurs

Customers benefit from making bitcoin payments:

The system provides fast confirmation of transactions—within 10 minutes. This is very convenient for international transfers of funds, where payments can often take from three to five days or even much longer.

Payments can be made 24/7/365.

The registration is easy, there are no age requirements, and still any restrictions for the institution of bitcoin purses. To get started, you do not need anything other than access to the Internet. You download the Bitcoin client to your computer or smartphone, and it generates the address of your wallet. After that, you can both accept and spend bitcoins.

Bitcoin allows you to buy goods and pay for services in the same way you would use a mobile app abroad, without needing to worry about currency conversion. Accordingly, the loss of funds is reduced to a minimum.

It is easy to see the simple and convenient storage of coins.

Although the commission for the transfer of funds must be paid by the sender, it is usually an insignificant amount and does not depend on when the payment is sent or where the payer is located.

With the use of the Bitcoin network, the customer’s general expenses for the purchase of goods can be reduced due to the fact that the seller or provider does not need to pay high commissions for the maintenance of their accounts.

Bitcoin wallets can be used on any electronic device: Android, Apple, or Windows. You can store your wallet on a USB flash drive.

You have full control over your funds. With BTC, others manipulating your funds is impossible due to the limited emissions and the lack of an ability to manage other people’s funds. Transactions cannot be withdrawn, your account cannot be frozen, and no one except you can manage it.

There is a high degree of anonymity and a lack of control by banks and various government agencies.

Cryptocurrency is not subject to inflation, and its value is determined solely by market fluctuations.

There is an absence of financial censorship. You cannot forbid someone to transfer funds or forbid someone from receiving them. Only you are the master of your money, even more so than when working with cash. Also, no one can limit the number of wallets and addresses you have; you can open as many as you need and even use a new address for each transaction.

Payments in cryptocurrency are safe, reliable, and protected. The security of transactions between individual users on the bitcoin network selling something to each other has increased significantly with the introduction of escrow services with several signatures required.

Escrow Services

The use of escrow services increases the security for the buyer when making payments in bitcoins. These services are usually provided by trusted third parties. The customer and the provider receive one key from the wallet, and the third key is located at the trusted third party. In the event of a controversial situation, a third party may act as a mediator and provide its key for the buyer so that he can receive his money back or for the provider so that the funds will go to his wallet.

The use of escrow wallets requiring several signatures in transactions of purchases and sales between individuals has become a common occurrence in the network of bitcoins. At the same time, this service is usually not used when working with large and respected companies, the authenticity of which is beyond doubt.

The Advantages of BTC for Providers and Mobile App Developers

Receiving BTC as a means of payment has a number of advantages for sellers:

The commission must be paid by the sender; the seller does not pay anything for receiving the funds. The fee charged is significantly lower than that of traditional payment systems.

Bitcoin allows you to make payments around the world without being tied to any specific currency. Since transactions in bitcoins are irreversible, the customer will not be able to cancel his payment, which reduces the risks for the provider. Bitcoin is actively developing and may become a widespread payment system in the future.

Unlike traditional bank accounts and payment systems, Bitcoin does not charge a monthly subscription fee or an account maintenance fee.

Bitcoin source codes are open and available to anyone who wants to learn these codes to make sure that the program performs only the declared functions and nothing more. The software is distributed under a free MIT license. The system is much less dependent on the human factor, the credibility of the issuer, or controlling bodies, which are replaced by algorithms, mathematics, and cryptography. Decentralization and open development guarantee that Bitcoin will not close unexpectedly, be taken over or perform any other harmful actions.

It is easy to make large payments using bitcoins since there are no restrictions on amounts. Some payment systems charge a higher commission for larger amounts or limit the maximum transaction size, which can create difficulties for those who sell expensive items.

The cost of cryptocurrency is not dictated by the authorities. You are not forced to accept bitcoins and only in certain payment amounts, which often happens with government money. The cost of cryptocurrency is determined only by the ratio of demand and supply in the market.

There is an absence of fiscal control.

There is an absence of intermediaries, such as banks. This reduces transaction time, transaction costs, and the risk of errors. There is decentralization and P2P interaction.

The Future of Bitcoin in Providing Services and Trade, Including Mobile App Development

Due to its decentralized nature, Bitcoin is able to radically change the sphere of trade and services, ensuring the simplicity of international payments. Such transfers are much cheaper than in other payment systems, and no commissions are currently charged for holding bitcoins. This is beneficial to both customers and providers. Thanks to this system, customers, providers, and sellers from different parts of the world can easily interact, and using escrow wallets with several signatures reduces the risk of fraud. The use of bitcoins also reduces the seller’s risk that the customer will cancel the payment. On the other hand, this feature can be a problem for those who really need to have money returned.

BTC is a new, evolving technology that could radically change the scope of trade and provision of services with the high degree of anonymity it offers to users. At the same time, all transactions are registered in a publicly distributed registry. Using existing software or developing their own, businesses can easily dispose of their funds without providing third-party payment system operators with access to their networks. This will provide sellers with more complete control over their e-commerce platforms.

Possible Disadvantages of Using BTC

The use of Bitcoin as a means of payment has its drawbacks. Eliminating some of these drawbacks is already underway. Such drawbacks include:

High volatility. The volatility of the price makes it difficult to forecast possible revenues, which leads to significant currency risks.

Lack of recognition in many countries. Not all countries are ready to introduce digital currency in their country. In Europe and in America, there is a tendency to introduce and maintain new means of payment, which cannot be said about all other countries. For example, in Bangladesh, Bolivia, Colombia, and Ecuador cryptocurrency is prohibited. According to the coin.dance service, in 77 of the 246 countries, bitcoin is fully legal, and therefore there are no restrictions on its use.

Insufficient popularity. Many people still do not know about Bitcoin, or they have a very poor opinion of it. Only small number of online stores, service providers like mobile app developers, and financial companies trust this asset, so there is no rush to accept bitcoins for payment.

Nevertheless, we can see how Bitcoin is gaining popularity among governments and with the broad masses of the population in many different countries, and we can expect to see an increase in the demand for it.

In conclusion

Bitcoin technology can change and improve that world of trade that we know now. It gives a number of advantages to both customers and sellers or providers. In addition to those mentioned above, further safety improvements and other technical improvements can be expected in the future. At present, decisions aimed at increasing the size of the blocks are already being implemented. BTC has all chances to become the digital currency of the future, operations with which will be almost free.